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GW Pharma still has the legs to get over a tenner, but pick your entry point

Ideally you are looking at dips to the 50-day line at £6.29 - Zak Mir.
GW Pharma still has the legs to get over a tenner, but pick your entry point
Work in action: GW's drugs are cannabis-derived.

GW Pharmaceuticals PLC (LON:GWP) has been on a tear of late – but is there any further upside to the stock?

Well, according to our charts guru Zak Mir, it could go as high as £10 a share (current price £8.77); however, Mir says it is worth picking your entry point.

“I would never pay more than the 10-day average, which is £8.23,” he said on the Proactive Investor Bulletin Board Show.   

“Ideally you are looking at dips to the 50-day line, which is way below [the 10-day average] at £6.29.” 

The shares have motored 315% higher since mid-March on the back of some positive results from a late-stage trial of a cannabis-derived drug that treats a severe form of childhood epilepsy.  

Recently, bid speculation has driven the stock on amid reports it has appointed an investment bank to screen interest in the company.  

“It has great fundamental backing and a great chart too,” Mir told host Nick Batsford.  

“We’ve had a rising trend channel and the big vertical move in March. We only retraced a third of that before it went up again   

“We have been gathering momentum ever since.   

“We have a target here even after all the gains as high as £10, given this rising trend channel we have seen.”  

GW, after this year’s performance is AIM’s third largest company with a value of £2.65bn.  

Last week the drug developer, which is also listed on the US tech exchange, NASDAQ, unveiled more pointers to the efficacy of Epidolex, for childhood seizures.  

Numis analyst Paul Cuddon called it “the most convincing ” data so far. It is expected GW will make a new drug application early next year.  

Last month investors were put on bid alert after a report from Reuters suggested the company had multiple potential suitors.  

The Reuters story also said GW had appointed Wall Street heavyweight Morgan Stanley to oversee the potential beauty parade.  

The interest was very firmly rooted around Epidiolex, which analysts reckon has the potential to deliver annual sales of around US$800mln.

The identities of the potential suitors were unknown; however, the big beasts in this sphere of the drugs market are Novartis (ETX:NOVN), Bayer (ETR:BAYN) and Almirall (BME:ALM). Analysts also reckon Lundbeck (CPH:LUN), Otsuka (TYO:4578) and Biogen (NASDAQ:BIIB) might be in the running.  

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